Stalled: President Obama's State of the Union housing 'stunt'

A year ago, in his State of the Union address, President Barack Obama promised to sic a task force of prosecutors on Wall Street firms, offering up some election-year red meat by targeting the bad guys who bundled toxic mortgages and sold them as solid investments during the financial crisis.

But as Obama prepares to address the nation again, on Tuesday night, his Residential Mortgage-Backed Securities Working Group has more words in its name than wins in court.

Text Size

Video: W.H. senior adviser previews speech on POLITICO LIVE

TOP 5: What to watch for

The group’s struggle to meet its mandate illustrates just how difficult it can be for the president to convert on State of the Union promises from one year to the next.

“This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans,” Obama said in last year’s address.

But since then, Obama hasn’t made the group a priority. Congress hasn’t provided the $55 million in funding he initially requested to jump-start the effort, and the Department of Justice is facing criticism that it dragged its heels, fearful of disrupting a fragile economic recovery by going after the big banks.

So, all in all, the RMBS Working Group, which has five co-chairs, has been a stereotypical interagency Washington task force.

New York Attorney General Eric Schneiderman, one of the co-chairs, got so fed up with Justice that he went directly to the White House last summer to plead for more investigators, according to two sources with knowledge of the matter.

“Did you get a copy of their report? It’s pretty good, isn’t it?” Rep. Scott Garrett (R-N.J.) joked sarcastically about the lack of output from the task force. “It’s a political stunt by the administration, which is what [Obama] has done during his State of the Union addresses.”

Even liberal allies of the president are starting to criticize him for another failure on cracking down on Wall Street.

“I think this has been an enormous missed opportunity to show that we take the law seriously and to show everyone is equal under the law,” former North Carolina Congressman Brad Miller said in an interview with POLITICO.

Miller originally was vetted to become the executive director of the working group but did not get the job.

“The president’s establishment of a working group to coordinate efforts at the federal and state level was a good step, but it’s critical that the group produce results,” Sen. Sherrod Brown (D-Ohio) said in a statement to POLITICO. “We cannot allow financial institutions to become too big to fail or too big to jail.”

Associate Attorney General Tony West touted the group’s resources and expertise in a statement, while adding it will continue to bring cases.

“This is just the beginning,” West said. “Right now, hundreds of hard-working, talented prosecutors, investigators, analysts and staff are working diligently all over the country on these complex, time-consuming cases to bring justice to the American people. We expect to announce more law enforcement actions.”

The task force, which comprises lawyers and investigators from Justice, the Securities and Exchange Commission, the Department of Housing and Urban Development, several other federal agencies, and state attorneys general, has picked up its pace a bit lately.